Readiness Checklist for Developers
How to Monetize Renewable Energy Tax Credits
As project owners and developers explore tax credit monetization options, determining eligibility requirements and understanding how these credits integrate into your capital stack is crucial. This comprehensive checklist is designed to guide you through the essential steps in preparing your project for tax credit transferability. By following these steps, you can streamline the process, mitigate risks, and position your project for successful monetization while maximizing the value of your tax credits.
While the checklist outlines the key steps and required documents for tax credit transferability, it’s important to note that the process doesn’t always follow a strict, chronological order. Many tasks can happen simultaneously, and some might be completed earlier or later depending on the project's development. Use this guide as a flexible roadmap; ensure a thorough review and completion of all the steps. Flexibility and preparation will be critical to navigating the process efficiently.
Pre-Listing & Project Development
Determine Eligible Projects & Tax Credits
Identify whether your project qualifies for tax credit transferability. Eligible projects typically include microgrid and biogas/biomass projects with a construction start date before 1/1/2025, and solar, wind, storage, EV chargers, and geothermal projects.
Determine Eligibility for Tax Credit Bonus Adders
Check if your project qualifies for bonus credits such as domestic content, energy community, or low-income community bonus adders using Ever.green’s IRA Map.
Ensure Prevailing Wage & Apprenticeship Compliance
For projects over 1MW, take steps to comply with the Prevailing Wage and Apprenticeship requirements from the beginning of construction to ensure you qualify for the full tax credit amount.
Project Contracting and Permitting
Enter into contracts and obtain permits required to develop, connect, build and operate project.
Project Financing and Ownership Documentation
Establish ownership of the project and tax credits, obtain financing for construction, and set up long-term debt and tax credit monetization plans.
Apply for Low-Income Community Bonus Credit (if eligible)
Apply for the low-income community bonus credit before the project is placed into service, as IRS approval is required before this point.
Market Readiness
Create a Project listing on the Ever.green Marketplace
Submit your project listing on the marketplace, including key project details, photos, and a rich description to engage potential buyers.
Assemble an Advisory Team
If needed, Ever.green can connect you with a network of experienced service providers.
- Tax Advisors
Confirm eligibility & calculate tax credit amounts. - Legal Counsel
Manage transaction risk, draft agreements, and ensure regulatory compliance. - Cost-Segregation Provider
Verify the costs being used to calculate the tax credit or step-up are eligible for that purpose. - Independent Engineer
Conduct a third-party review of project viability and technical risks. - Appraisal Provider
Needed for ITCs for which a step-up is being used to determine the tax credit value. - Insurance Provider
Secure quotes and proposals for tax insurance to protect against potential risk.
Upload Diligence Documents into the Ever.green Data Room
See below for a comprehensive list of documents buyers look for during the diligence process. You can also reference Ever.green's data room for a detailed list of documents needed to support the diligence process.
Work with Ever.green to Identify Potential Buyers & Secure Bids
Get connected to buyers and review term sheets in the Ever.green deal room.
Sign Term Sheet & Enter Negotiations
Once general commercial terms are agreed upon with a buyer, sign the term sheet and begin due diligence and negotiations in the secure Ever.green deal room.
Finalize the Transfer/Sale Agreement
Project Placed In Service
Note: The project may be placed in service before the deal is finalized. The project can be operational while the sale of credits is still being negotiated.
Secure Documentation for Placement in Service
Obtain key documents to verify that your project has been placed into service:
- Permission to operate letter
- Certificate from the EPC contractor for project completion
- Letters from the utility company confirming interconnection and operation
- Certification of meeting IRS five-factor test for placement in service (PIS)
Submit IRS Registration
Submit the IRS registration at least 120 days before the tax return due date to secure a registration number for your project.
Upload Additional Documents to Ever.green Data Room
Ensure that all supplementary documents are uploaded, including proof of registration, placement-in-service certificates, and bonus credit qualification documents.
Closing, Transfer & Tax Filing
Finalize Cost Segregation & Appraisal (If applicable)
Complete the cost segregation and, if necessary, the appraisal to facilitate credit transfer.
Secure Tax Insurance Policy (If applicable)
Obtain tax insurance if required, ensuring coverage for any risks associated with the credit transfer.
Obtain Forbearance Agreement (For ITCs, If applicable)
If there is project-level debt, secure a forbearance agreement from the lender, allowing for the tax credit transfer.
Prepare IRS Transfer Election Statement
Draft the IRS transfer election statement, which will be submitted with your tax return. This document should include the project description, registration number, and attestation of the tax credits earned and transferred.
Complete these steps by the due date for your (or your buyers’) tax filing in the year the project is placed in service:
Complete IRS Forms for Claiming Tax Credits
Ensure you have completed the required IRS forms for taking the tax credits:
- Form 3468 for ITCs
- Form 8835 for PTCs
- Form 3800 for general business credits or any credit sale
Receive Cash Consideration
Ensure you have received all cash consideration for the purchase of the tax credits, if not received at closing.
File Tax Return with IRS Transfer Election Statement
Submit your tax return including the required IRS forms and the transfer election statement. This statement should include the project description, registration number, and confirmation of the credits earned and transferred.
Preparing for tax credit monetization requires careful planning, thorough documentation, and proactive engagement with buyers. By following this checklist and utilizing the resources available through the Ever.green marketplace—including our intuitive listing process, comprehensive data room, and collaborative deal room—you can ensure your project is well-positioned for success. Get in touch with the Ever.green team to leverage their expertise in navigating the path to monetization with confidence.
Download Checklist
Make sure you're prepared to sell your tax credits.
Important notice: Ever.green and its affiliates do not provide tax, legal, or accounting advice. This material is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
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